Stock Name: THPLANT
Company Name: TH PLANTATIONS BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute is initiating an Outperform call on TH PLANTATION []s and assigned it a PE of 11 times FY11 and fair value of RM2.30.
The research house said on Friday, Dec 10 TH Plantations is the plantation arm of Lembaga Tabung Haji and it has plantation land bank of about 39,159 hectares and five palm oil mills with a total milling capacity of 702,000 tonnes per annum.
'We project TH Plantations THP to record a three-year earnings CAGR of 25% to FY12, on the back of a three-year revenue CAGR of 14%.
'The reason for the stronger profit growth is the higher CPO prices as well as an expectation of improved FFB yields, which translate to better margins. We project net dividend payouts at a consistent 55-60% p.a., which translate to attractive net yields of 5.6% for FY10, rising to 7-8% for FY11-12,' it said.
RHB Research said TH Plantations' earnings are very sensitive to CPO price movements and every RM100/tonne change in CPO price would impact earnings by 10%-12% per annum.
'Assigning it a PE of 11 times FY11, which is the mid-point of its historical average, we arrive at a fair value of RM2.30. Initiate with Outperform,' it said.
Company Name: TH PLANTATIONS BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute is initiating an Outperform call on TH PLANTATION []s and assigned it a PE of 11 times FY11 and fair value of RM2.30.
The research house said on Friday, Dec 10 TH Plantations is the plantation arm of Lembaga Tabung Haji and it has plantation land bank of about 39,159 hectares and five palm oil mills with a total milling capacity of 702,000 tonnes per annum.
'We project TH Plantations THP to record a three-year earnings CAGR of 25% to FY12, on the back of a three-year revenue CAGR of 14%.
'The reason for the stronger profit growth is the higher CPO prices as well as an expectation of improved FFB yields, which translate to better margins. We project net dividend payouts at a consistent 55-60% p.a., which translate to attractive net yields of 5.6% for FY10, rising to 7-8% for FY11-12,' it said.
RHB Research said TH Plantations' earnings are very sensitive to CPO price movements and every RM100/tonne change in CPO price would impact earnings by 10%-12% per annum.
'Assigning it a PE of 11 times FY11, which is the mid-point of its historical average, we arrive at a fair value of RM2.30. Initiate with Outperform,' it said.
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